Correlation Between Casio Computer and Merit Medical

Can any of the company-specific risk be diversified away by investing in both Casio Computer and Merit Medical at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Casio Computer and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Casio Computer Co and Merit Medical Systems, you can compare the effects of market volatilities on Casio Computer and Merit Medical and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Casio Computer with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Casio Computer and Merit Medical.

Diversification Opportunities for Casio Computer and Merit Medical

-0.27

Correlation Coefficient

Casio Computer  Merit Medical

Very good diversification

The 3 months correlation between Casio and Merit is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer Co and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems and Casio Computer is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Casio Computer Co are associated (or correlated) with Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of Casio Computer i.e., Casio Computer and Merit Medical go up and down completely randomly.

Pair Corralation between Casio Computer and Merit Medical

Assuming the 90 days horizon Casio Computer is expected to generate 42.33 times less return on investment than Merit Medical. In addition to that, Casio Computer is 1.55 times more volatile than Merit Medical Systems. It trades about 0.0 of its total potential returns per unit of risk. Merit Medical Systems is currently generating about 0.05 per unit of volatility. If you would invest  7,035  in Merit Medical Systems on October 4, 2024 and sell it today you would earn a total of  2,574  from holding Merit Medical Systems or generate 36.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Casio Computer Co  vs.  Merit Medical Systems

Casio Computer

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Casio Computer is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Merit Medical Systems

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Merit Medical Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Merit Medical is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Casio Computer and Merit Medical

The main advantage of trading using opposite Casio Computer and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Casio Computer position performs unexpectedly, Merit Medical can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Merit Medical will offset losses from the drop in Merit Medical's long position.

The idea behind Casio Computer Co and Merit Medical Systems pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..